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How to start business on eBay

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Category : > New Business Setup
Posted On : Fri May 18th,2018

Step by step guidance to start a business with eBay as a vendor/seller.

Register a business name to start a business on eBay: A business name is registered to start a business on the eBay as a sole proprietorship, corporation or a Limited Liability Company. A Non US Resident can also open a company same as a US resident in the USA.

A Non USA person does not have to be physically present in the USA to establish a company. The entire process of business registration in the USA is completed remotely and in most cases electronic signatures are acceptable.

A separate entity is not compulsory to create business on eBay, but it is recommended to keep the business activities separate from personal and give business a unique name to make a brand.

What is the best state register business in the USA?

It is recommended for a US resident to start a company in the home state and a Non US resident's determination formula is the yearly maintenance cost of the state such as initial company set up cost, yearly franchise taxes to maintain company and annual report filing.

Open a bank account for an eBay business: A US resident opens a bank account in the local branch and also create a PayPal account, whereas a Non US resident uses local accounts and get an Individual Taxpayer Identification Number (ITIN) which is applied along with the income tax returns.

The Internal Revenue Service generally issues ITIN in 8-12 weeks and may also ask the original passport or the driving license to verify the information for a Non US Resident.

How to create a vendor account on the eBay?

An eBay account is set up to become an eBay vendor. Watch a video to set up an account on eBay to start selling.

Get Resellers Permit to sell on eBay: A vendor applies for a seller's permit to the department of revenue or division of taxation and finance for purchases without paying a sales tax on the taxable items.

Contact suppliers to full fill order: Reliable suppliers are contacted to supply items to full fill the requirement. Generally, an eBay vendor/advertiser collects order on eBay and pass on to a supplier for the drop shipping to a buyer.

A sales cycle on eBay is generally encompassed by the following elements.

  1. eBay Sales
  2. Supplier Cost
  3. eBay Fee
  4. Gift card fee
  5. DS-Tools
  6. Transfer to the eBay vendor/advertiser account.

How to sell on the eBay?

eBay an eCommerce portal which is one of the easiest and fastest method to enter into an eCommerce business. An eBay seller follows the following steps to run a successful eCommerce business.

  1. List items on the eBay wall
  2. Ship the sold items either from the warehouse or send a request to a supplier to deliver to a buyer.
  3. Get paid on the account such as PayPal which is secured and one of the popular methods to receive payment.

How to run a successful business on eBay?

It is very important for an entrepreneur to list the priorities and fulfill orders in a timely manner, to retain and expand the credibility to grow the business. An eCommerce business has ethics and etiquette to follow to run a successful business which is described below based on our decades of experience in the eCommerce business.

  • Timely respond to the existing and potential customer inquiries.
  • Create community through digital marketing and share achievements which are unique to captivate the attention to grow the network.
  • Clearly describe refund and terms to buy product to avoid any future conflict between a seller and buyer.
  • Collect customer reviews about the customer service which helps to improve the quality of the customer service based on the customer feedback.
  • Deliver order on time otherwise post an update.


Sales Tax Collection as an eBay Seller: It is highly recommended to open a separate bank  account to deposit sales tax which is collected from the buyers and advise to the bank to credit the sales tax in the revenue agency bank account electronically when advised.

How to handle eBay accounting?

An eBay seller records following activities to create a profit and loss report of the eBay activities which is subsequently reported to the taxing authorities.

eBay auction payment: It is recorded revenue, which is received from the buyers who purchased items from eBay sellers.

PayPal Fee: PayPal is an online payment system which is used as an agent between a buyer and seller. PayPal collects a fee on each activity which is performed between a buyer and seller. PayPal fee is recorded an expense which reduces income.

There are two different types of refunds which are described below. A refund reduces cash, whereas a refund increases cash.

Refund to customer: The money is returned to an unsatisfied customer if the goods are not as per the standards or expectations. Refund to customer reduces cash and sales.

Refund from a supplier: A supplier/vendor return money to an eBay seller if the supplies are not as per the standards which increases cash and reduces inventory.

Account hold for open authorization: eBay refunds money to the customer from the seller account which reduces cash. eBay generally supports to its buyers than seller to maintain its reputation which sometime hurt and demotivate seller.

Reversal of general account hold: eBay and PayPal run a reversal of "Account hold for open authorization" once the dispute is resolved, which increases cash of the seller's account.

Payment made to suppliers: Payment made to suppliers from the PayPal account reduces cash.

Hold on balance for dispute investigation: eBay puts on, hold on the money if there is any dispute between an eBay buyer and seller until it is under the investigation, which reduces seller's cash because such funds are not available to use.

Cancellation on hold for dispute resolution: eBay removes hold from the disputed sales activity when the issue is resolved and concluded in the seller's favor which increases cash of an eBay seller.

General Withdrawal/Debits: The money is taken for the personal use reduces cash  and recorded salary expense or a profit withdrawal.

Mass Pay Payment: It is one of the PayPal features which is used to make or receive multiple payment such as commissions, rebates, rewards, and general payments.


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